Rail budget 2016 gets thumbs up from Steel industry

MUMBAI: Indian steel-makers gave a thumbs up to Rail Budget presented on Thursday, saying infrastructure spending promised by the government will help increase steel demand in the country.

Indian government hopes to invest 1,21,000 crore on Indian Railways in the coming financial year. Rail Minister Suresh Prabhu's pragmatic plan include commissioning 2,800 km of broad gauge conversion and 2000 kilometers of railway electrification, two new dedicated freight corridors, port connectivity, suburban railway projects and station redevelopment work.

The government is banking on infrastructure spending to kickstart investment cycle and create jobs. JSW Steel Chairman Sajjan Jindal said investment plans in the rail budget augur well for giving a fillip to the steel demand in the country.

"From industry's perspective we welcome the announcement of a review of freight tariff policy to evolve a competitive freight structure and increase the share of railways vis-à-vis other modes. This will help in bringing down overall logistics cost for the industry and improve our competitiveness," he said.

Indian steel industry is suffering competition from cheap Chinese imports that are pushing down prices in the domestic market. Recently imposed duties on imported steel are giving a breathing to space to Indian companies.

"Railways is an important part of an overall infrastructure growth and we are confident that the timely execution of the initiatives announced in this budget will have a positive impact on all the sectors that are dependent on railways including steel," said Tata Steel India Managing Director TV Narendran.

Tata Steel reported a loss of Rs. 2127.23 crore on consolidated basis for the December quarter while JSW Steel reported a consolidated net loss of Rs. 923.34 crore.